Roadmap for Successful Saving for First Time Home Buyers

Saving is one of the most important financial considerations for the aspiring homebuyer. Saving money helps you put together cash for your down payment, but it also prepares you for potentially expensive home repairs and expenses. Likewise, saving now gets you into the habit of saving later; a habit you’ll need to continue even after buying a home in order to meet retirement needs and other goals.

How much to save

Most people have no idea how much money they should be saving. While conventional wisdom says to put 5% of your income into savings, that may not be a realistic goal depending on your income, expenses and needs. Unfortunately, only you can determine how much you need to be saving, and whether or not you’re meeting that goal. Do this by putting together a budget, and developing a long-term plan for your goals.

When creating a plan, consider all your goals

Many aspiring homeowners focus only on saving a down payment for buying a home, and forget to think about all the other potential financial drains that lie ahead. You can’t just save to buy a home; you should save for home repairs, and in the event that a member of the household loses a job. You should save for emergencies. If you have kids, you need to save for education. Finally, you need to save for retirement.

Put together a saving plan that will meet all your future needs; not just your needs in the next few years. Think about your long-term goals when you buy a house. You may not want to buy all the house you can afford, because it might be a good idea to put some of that money toward retirement savings or other goals.

Bottom line: you can’t make an intelligent decision about how much you should be saving and how much home you can afford until you’ve outlined your goals, budget, income and expenses.